Wednesday, February 22, 2017
The Fairness in Class Actions Litigation Act of 2017 (H.R. 985): A Few Thoughts
By Professor Simona Grossi
The Fairness in Class Actions Litigation Act of 2017 (H.R. 985) is currently pending in Congress. The bill, purportedly intended to reform class actions and bring “fairness” to the process, implicitly reveals, and not that covertly, the proponents’ disapproval of the work that the Advisory Committee has been doing on Fed. R. Civ. P. 23 for the past five years. Apparently the Advisory Committee is not moving fast enough or in the preferred direction. Of course, Congress has the constitutional authority to provide rules of procedure for Federal courts, but the system devised under the Rules Enabling Act (REA) has the benefit of proceeding through a transparent public process that, although far from perfect, promotes a fair consideration of all sides of any proposed alteration of the federal rules. Measures pushed through Congress, although subject to the usual hearing process, rarely have the detailed consideration and input from all interested parties that occurs under the rulemaking system followed by the Advisory Committee.
The procedural reform imposed by H.R. 985 is not a bottom-up, but rather a top-down imposition of relatively narrow point of view. It is certainly not the product of the type of public forum system followed by the Advisory Committee. True, the legislature is representative of the people. But it is truly so? To what extent? And even assuming that it is, the class actions topic is so technical—sometimes even hyper technical for the experts in the field—that it demands a focused and narrow process of reflection and study, exchange and confrontation, precisely the one the Advisory Committee engages in and has engaged in with respect to Rule 23.
Furthermore, H.R. 985 leads to undemocratic results, as it suggests the adoption of higher threshold for class certification, an approach that promotes frontloading of the merits analysis to the very outset of the litigation, before discovery has taken place. This approach can easily, and does often result in denials of access to justice.
Section 1716 (a), for examples, provides that “[a] federal court shall not issue an order granting certification of a class action seeking monetary relief for personal injury or economic loss unless the party seeking to maintain such a class action affirmatively demonstrates that each proposed class member suffered the same type and scope of injury as the named class representative or representatives.” And subdivision (b) of that same section provides that “a class seeking monetary relief for personal injury or economic loss shall include a determination, based on a rigorous analysis of the evidence presented, that the requirement in subsection (a) of this section is satisfied.” Essentially, the bill imposes an elevated evidentiary threshold at the outset, that is, a heavy burden of proof on plaintiffs seeking certification before discovery has taken place. This is in sharp contrast with the Supreme Court’s jurisprudence on the subject. See, e.g., Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184, 1191 (2013) (clarifying that “the office of a Rule 23(b)(3) certification ruling is not to adjudicate the case; rather, it is to select the method best suited o adjudication of the controversy fairly and efficiently.”).
Despites its pretense at protecting all parties to the litigation, H.R. 985 clearly benefits defendants to the detriment of plaintiffs, as it makes it harder for plaintiffs to successfully access the class action joinder device, originally intended to allow members of a class “so numerous as to make it impracticable to bring [all the claims] before the court,” to do so when the other ordinary joinder mechanisms would fail. JAMES L. HOPKINS, THE NEW FEDERAL EQUITY RULES 145 (8th ed. 1933).
Consistent with this pro-defendant bias, §1718 of the bill also requires that a class action seeking monetary relief is “defined with reference to objective criteria and [that] the party seeking to maintain such a class action affirmatively demonstrates that there is a reliable and administratively feasible mechanism (a) for the court to determine whether putative class members fall within the class definition and (b) for distributing directly to a substantial majority of class members any monetary relief secured for the class.” Section §1718 thus imposes the requirement of “ascertainibility” in the class certification procedure, which requirement had been considered and rejected by the Advisory Committee during the five years of work, research, consideration, and dialogues with the members of the public, the bar, and the judiciary.
The Advisory Committee, aware of a trend of jurisprudence that is trying to elevate the certification standard at the outset, rightly and wisely rejected that suggestion, to make sure that class actions continue to offer an access-to-justice method that might be otherwise not available to class members. In other words, the Advisory Committee is trying to promote a democratic access to justice, and it’s doing so following the democratic process designed by REA. The bill, on the other hand, if approved, will distort the original idea of the class actions devise, turn class actions into an undemocratic procedural tool, and ultimately distort the role of the federal courts as institutions intended to promote the vindication and development of substantive rights.
But the bill is not only democratically untenable. It is also professionally suspect. For example, §1720 dealing with issues classes, provides that “[a] federal court shall not issue an order granting certification of a class action with respect to particular issues pursuant to Rule 23(c)(4) of the Federal Rules of Civil Procedure unless the entirety of the cause of action from which the particular issues arise satisfies all the class certification prerequisites of Rule 23(a) and Rule 23(b)(1), Rule 23(b)(2), r Rule 23(b)(3).” Essentially, the bill eliminates the utility of issue classes by forcing this narrow, specialized type of classification to satisfy the more onerous requirements applicable to a standard class action. Perhaps this was the surreptitious goal; better, I think, to state that goal up front and clearly. Similarly, Section 4 of the bill seeks to amend 28 U.S. §1447 in a manner that shows an obvious lack of understanding of the rules of aggregation applicable to diversity actions. More generally, the apparent lack of professional care in the drafting of H.R. 985 proves my original point
we do need experts to deal with technical procedures issues and a process like the one designed by the REA.
Tags: Civil Procedure